The accelerating spread of COVID-19 has halted many face-to-face sales and transactions for goods and services, which will be very damaging for those businesses.
However, on the other hand, this is an unprecedented opportunity for both innovative start-ups who are seeking funding, and smart investors who are seeking investment opportunities.
UK start-up Cazoo is currently developing a portal to allow virtual car sales, which buys used cars, sells them online and then delivers to your home.
On Monday, Cazoo announced that it raised £100 million of funding which they intend to use to continue expanding their business.
DMG Ventures is leading the round with CNP (Groupe Frère), Eight Roads Ventures, General Catalyst, Mubadala Capital, Octopus Ventures and Stride.VC also participating.
The company has now raised £180 million since being founded 18 months ago.
Alex Chesterman, Founder & CEO of Cazoo, declared in a statement “it is clear that UK consumers are ready to buy cars online in a convenient, hassle-free way”.
Cazoo’s success is down to 3 main reasons:
Firstly, Cazoo’s commercial operations are very impressive, in the first 3 months it has generated £20 million in sales, which indicates a strong growth trajectory.
Secondly, competition, start-ups in this space have experienced difficulties in balancing costly inventories with reaching sales and deliveries at large enough margins. Cazoo is capitalising on this exciting business model in a way that the competition has failed to.
Thirdly, Alex Chesterman has an excellent reputation as a repeat entrepreneur who first founded LoveFilm (coined ‘the Netflix of Europe’) and then sold it for £200 million to Amazon, while Chesterman subsequently founded Zoopla and sold it to Silver Lake for £3 billion.
It may still be surprising to some that investors are prepared to provide so much funding to start-ups during the current COVID-19 uncertainty.
Especially Cazoo, a start-up that not only centres around vehicles when governments worldwide are urging (and even obliging) people to stay at home, but also a start-up that also allocates used vehicles to a new owner – during a period in which we don’t fully understand how COVID-19 spreads, and how long it remains on surfaces and in enclosed environments (such as cars).
However, Cazoo is managing the situation well by reassuring both consumers and investors that they are adapting to the current situation, while also using the situation to their advantage.
Chesterman reassured the public that Cazoo will not carry out any deliveries to people who are self-isolating.
However, he also seized the opportunity to express the potential of Cazoo to benefit people during the COVID-19 outbreak.
“The current coronavirus situation is accelerating the shift from offline to online transactions given its unique delivery proposition”, Chesterman said.
“Cazoo is now focused on keeping consumers safe by not having to leave their homes to buy a car. We are also looking at how Cazoo can help other organisations move essential supplies around the country via our fleet of car transporters in these difficult times.”
The success of Cazoo should inspire other start-up entrepreneurs to seize the opportunity to express their potential to improve lives during this time.
Cazoo should, in theory, be experiencing problems due to the coronavirus pandemic, however it has reframed the situation to secure an enormous amount of investment. If Cazoo can do it, so can other cunning, tech-savvy entrepreneurs.
Moreover, for investors who are concerned about stock market volatility, it is an opportunity to consider investing in innovative start-ups which have the potential to alleviate problems relating to COVID-19.
miiCARE, EMSOL, Perfectly Spoken, and Accunea are 4 excellent start-ups that have huge potential during the coronavirus pandemic to improve and even save lives in a variety of innovative and fascinating ways.